Oct. 14, 2013 - 06:00AM
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A co-founder of the nonprofit Operation Homefront has filed a lawsuit alleging that charity officials fired her for refusing to sign off on and submit “inaccurate and unlawful” reports to donors.

Amy Palmer, who served for 11 years as chief development officer and chief programs and field operations officer for the charity, was responsible for reviewing, approving and submitting funding reports to grant providers and funders, according to the lawsuit, filed Oct. 11 in state court in Bexar County, Texas. Palmer also served as chief operating officer of the charity.

“We believe the allegations to be without merit, and will defend the organization vigorously,” said Jim Knotts, Operation Homefront president and chief executive officer.

“In fact, given that we discovered this discrepancy internally, and took reasonable, appropriate, and swift corrective action, we feel we set the ethical standard for responsible nonprofits,” Knotts said. “This is exactly the kind of response people should expect from responsible nonprofits when a situation like this is discovered. Our mission to support our military and veteran families is too important to tolerate anything else.”

Military Times reported Sept. 20 that Operation Homefront had fired an employee because of discrepancies in documentation involving the whereabouts of about $36,000 in donated items. Knotts did not name Palmer at the time. “While an investigation is ongoing, we have no indications that this situation involves any cash or other donated items,” he said, stressing that the investigation was focused on the problems with documentation.

Palmer alleges that beginning in July, she explained to the organization’s chief financial officer and others that several of the funding reports they were asking her to approve were inaccurate, included illegally and fraudulently coded funds, and violated terms of grant agreements.

She said she refused to submit the reports, and on Sept. 17, she was fired, according to the lawsuit. She seeks damages of more than $200,000 but less than $1 million for injury to her reputation and mental anguish, and lost wages and benefits, among other things.

Knotts said the charity discovered a “falsified acknowledgment letter regarding the receipt” of the donated items.

“The letter originated with one staff member. In order to hold the person accountable for [her] actions, and consistent with Operation Homefront’s value to do the right thing, we terminated the employment of Amy Palmer,” he said.

Palmer’s name was reported in connection with the incident on Oct. 10 by NBC, and Palmer accuses Knotts and the charity’s spokesman Tom Greer of defamation, alleging they made “false statements and innuendos” about her to a news outlet, which is not named in the lawsuit.

Information also was posted on the charity’s website, and Palmer sent Operation Homefront a “cease and desist” letter regarding the information. In addition, Operation Homefront had, before then, been “made aware of the location of the alleged ‘missing’ in-kind contributions,” according to the lawsuit.